The real effects of lending relationships on innovative firms and inventor mobility

Johan Hombert, Adrien Matray

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

We study how relationship lending determines the financing of innovation. Exploiting a negative shock to relationships, we show that it reduces the number of innovative firms, especially those that depend more on relationship lending such as small, opaque firms. This credit supply shock leads to reallocation of inventors whereby young and productive inventors leave small firms and move out of geographical areas where lending relationships are hurt. Overall, our results show that credit markets affect both the level of innovation activity and the distribution of innovative human capital across the economy.

Original languageEnglish (US)
Pages (from-to)2413-2445
Number of pages33
JournalReview of Financial Studies
Volume30
Issue number7
DOIs
StatePublished - Jul 1 2017

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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